Budgetary Rural Push not enough to Deal with Farm Distress

The Finance Minister Arun Jaitley has given no sops to the middle classes by offering any concessions in the income tax rates. The industrial sector has been assured of a big push through massive investment in the infra sector but the focus is solely on the rural areas including the announcement of the ambitious government-funded medicare for the poor. Here’s a report on the Union Budget, for Different Truths.

Prime Minister Narendra Modi has played a gamble with his government’s last full budget for 2018-19 by staking the BJP’s political future with the response from the country’s distressed farming community to his budget proposals for reviving the rural sector. The Finance Minister Arun Jaitley has given no sops to the middle classes by offering any concessions in the income tax rates. The industrial sector has been assured of a big push through massive investment in the infra sector but the focus is solely on the rural areas including the announcement of the ambitious government-funded medicare for the poor.

The Prime Minister earlier announced the intention of the government to double the income of the farmers by 2022 and now in this budget, the Finance Minister has announced that the government wants the farmers to earn 1.5 times the production cost and the minimum selling price for the kharif crops has been set at 1.5 times the produce price. The centre will work with the states to see that all farmers get a fair price. All the recent reports submitted to the government have mentioned of the farm distress and the need for modern marketing methods so that the farmers are able to sell their produce at their chosen time and get some margin. The present methods of storage and marketing are still outdated and act against the interests of farmers. The budget has announced the creation of Rs. 2000 crore infra fund to strengthen the market connectivity.

The budget proposals make big allocations for agriculture in general but the social tensions and the religious divide have affected adversely the informal sector of the rural economy, especially the agriculture, animal husbandry and the trade in cattle. This sector contributes in a big way to the rural growth and employment but still, the situation is not under control leading to continuing tensions among the daily wage earners and the farm workers. The demonetisation and the social tensions have led to job erosion in the informal sector. That is not being taken into account. The farm sector will not have real growth if the underlying tensions in the rural areas are not dealt with. The recent tensions and riots in Kasganj of Uttar Pradesh indicate that the situation in the BJP ruled states are far from normal and the most affected are the people working in the informal sector.

There is no composite programme for big job generation in the economy in the interim period. The programmes announced in the budget will take its own time and it will have a very little impact on the employment market in the next one year. The government’s propaganda machinery may try to create a hype over the bonanza for the agriculture sector but if there is no immediate impact on the life of the farmers and adequate jobs are not generated, the hype of the Modi government over the farmer-friendly budget, will be exhausted and the people will start assessing the situation on the basis of the hard reality they are facing in their day to day living.

The Modi government has enjoyed the advantages of declining oil price in the first three years of its rule. This has given it a big cushion to maintain the fiscal balance but this advantage is going as the prices have shot up in the fourth year and there is every possibility that the prices will further go up leading to a steep hike in the import bill for oil. Prime Minister himself is getting feedback from his advisers that if the oil price touches US$ 80 a barrel by the end of this year and there is some problem with the next monsoons, the economic situation will deteriorate from the end of 2018 making the political mood of the people difficult for the BJP and the Sangh Parivar in early 2019.The farmers package and the rural programmes on which the PM and his advisers are depending for a turnaround will bring no relief to the BJP. Before the situation goes down further to the discomfiture of the saffrons, Prime Minister may opt for Lok Sabha poll along with the state assemblies for Rajasthan, Madhya Pradesh, and Chhattisgarh to project the elections as a referendum on the Prime Minister Narendra Modi.

The political situation may turn hostile further in the poll-bound states this year as the indications from Rajasthan suggest. The Congress has been charged now and despite some hiccups, the opposition parties including the Congress are seriously making efforts to take on BJP unitedly. Prime Minister has been talking of the need for holding elections simultaneously in Lok Sabha and state assemblies and this thinking has to do with his assessment that without projecting him as the supreme leader, the state BJP chief ministers may not be able to achieve any success in the assembly elections. Their own performance is being rejected by the voters of their respective states. All the three states Rajasthan, Madhya Pradesh and Chhattisgarh face the prospects of acute anti-incumbency.

The 2018-19 budget proposals will be used by the centre and the BJP led mass organizations to project the Modi government as pro-poor and pro-farmer, the Opposition has to unitedly fight and expose the BJP government’s policies. The opposition parties have to put their houses in order very fast and forge a common programme so that they are not caught napping if the Prime Minister gives them a surprise by announcing snap poll later this year.

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